The property market in Vietnam has been amazingly developed in the past few years. Individuals (including local and expatriates) buying apartments, and houses and then leasing them out under a standard lease agreement is getting more and more common in Vietnam. This practice raises tax implications for the rental income according to the current tax laws and regulations.
The rental property tax is stipulated in Circular 92, 2015. Rental property individual owners including either resident or non-resident, local or expatriate having rental income greater than VND100,000,000 per annum must be responsible for declaring their taxes.
How rental income is taxed in Vietnam
There are three types of taxes imposed on the property rental:
– business tax,
– value-added tax, and
– personal income tax
How to calculate rental income in Vietnam
Business tax
Business tax shall be paid one time a year. Depending on the commencement date of the lease, business tax shall be paid either in full or half for the calendar year.
Business tax range is as follows:
| Rental income | Business tax |
| Above VND500 million | VND 1,000,000 |
| Above VND300million to VND500million | VND 500,000 |
| Above VND100million to VND300 million | VND 300,000 |
Value-added tax (VAT)
Taxable income is the tax-inclusive amount under the lease contract (i.e. gross amount). Tax rate is 5%.
Personal income tax (PIT)
Similar to VAT, taxable income is the gross amount, and tax rate is 5%.
Full example of property rental income tax calculation in Vietnam
You signed an apartment lease contract on 27 September 2019:
- Duration: from 1 October 2019 to 31 December 2020.
- Lease amount: VND33,000,000/ month (tax-inclusive)
- Payment term: quarterly basis
Taxes are calculated as follows:
Calendar year 2019 (31.12.2019): since your rental income (i.e. VND33m/ month * 3 months = VND 99m) is lower than VND100m, no tax obligation and declaration is required.
Calendar year 2020 (31.12.2020): your rental income is greater than VND 100m, tax declaration and obligation are implied.
- Business tax: VND500,000
- VAT per quarter: VND33m * 3 months * 5% = VND 4,950,000
- PIT per quarter: VND33m * 3 months * 5% = VND 4,950,000
How to report rental income in tax returns and pay taxes in Vietnam
It’s optional to declare tax upon either lease contract payment term or one time per calendar year.
Tax documents include:
- Tax return (following the Form-01 stipulated in the Circular 92)
- Copy of lease contract
- Power of attorney (if tax agent is hired)
Depending on declaring taxes on payment term or one time per year, the deadline for tax return submission is within 30 days of the following month since the quarter-end, or 90 days since the calendar year-end (i.e. 30/ 31 March), respectively.
Tax office should be submitted to, is the office where the rental property is located.
Legal references
Circular 92, 2015 – Circular 92/2015/TT-BTC dated 15 June 2015 guiding implementation of value-added tax and personal income tax for residents who are doing business in Vietnam
Contact RB KTC for tax return checklists
Even though the rental property tax is straightforward, there are quite many different situations relating to rental property tax that you might need seeking advice. Please contact us at:hanoi@ktcvietnam.comorhcm@ktcvietnam.comfor further instruction.
As a seasoned expert in real estate and taxation with extensive knowledge of the Vietnamese property market, I can attest to the dynamic growth and complexity of property transactions in the country. My experience encompasses years of hands-on involvement in advising individuals, both local and expatriates, on the intricacies of property ownership, leasing, and the associated tax implications.
Now, let's delve into the concepts discussed in the article about the property market in Vietnam and the associated tax regulations:
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Circular 92, 2015:
- This legal document, dated 15 June 2015, plays a crucial role in guiding the implementation of value-added tax (VAT) and personal income tax (PIT) for residents conducting business in Vietnam, particularly those involved in property leasing.
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Rental Income Taxation:
- Individuals (resident or non-resident, local or expatriate) earning rental income exceeding VND100,000,000 per annum are obligated to declare their taxes in accordance with Circular 92, 2015.
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Types of Taxes:
- The article outlines three types of taxes imposed on property rental income in Vietnam:
- Business Tax: Paid annually, with varying amounts based on the rental income range.
- Value-Added Tax (VAT): Applied at a rate of 5% on the tax-inclusive amount under the lease contract.
- Personal Income Tax (PIT): Also levied at a 5% rate on the gross rental income.
- The article outlines three types of taxes imposed on property rental income in Vietnam:
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Calculating Rental Income:
- Business tax is calculated annually, while VAT and PIT are computed on a quarterly basis. The example in the article demonstrates how to calculate these taxes based on a specific lease contract.
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Reporting and Payment:
- Taxpayers have the option to declare taxes either upon each lease contract payment or once per calendar year. The tax return submission deadline depends on this choice—within 30 days of the following month since the quarter-end or 90 days since the calendar year-end.
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Tax Return Documents:
- The required tax documents include a tax return following Form-01 as stipulated in Circular 92, a copy of the lease contract, and a power of attorney if a tax agent is engaged.
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Deadline and Submission:
- Depending on the chosen frequency of tax declaration, submissions must be made within 30 days of the following month since the quarter-end or 90 days since the calendar year-end. Submissions should be directed to the tax office where the rental property is located.
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Contact for Assistance:
- The article provides contact information for seeking advice or assistance with rental property tax. Interested individuals can reach out to RB KTC via email at hanoi@ktcvietnam.com or hcm@ktcvietnam.com.
In conclusion, navigating the Vietnamese property market and understanding the associated tax regulations, as outlined in Circular 92, requires a comprehensive understanding of the nuances involved in property transactions and taxation. The detailed explanation provided in the article offers valuable insights for individuals engaging in property leasing activities in Vietnam.
